"A young man was murdered last week and we extend our sympathies to the family and friends who mourn his loss. Words cannot express the disappointment we feel knowing that one of our players was arrested as a result of this investigation," the New England Patriots said in a statement. "We realize that law enforcement investigations into this matter are ongoing. We support their efforts and respect the process. At this time, we believe this transaction is simply the right thing to do."

The Patriots drafted Hernandez in the fourth round of the 2010 draft, believing they got a steal of a player with first-round talent whose stock slipped because of off-field character concerns. The team signed him to a long-term contract worth nearly $40 million last August after he excelled in his first two seasons — and also stayed out of any sort of trouble. He had no prior arrests nor suspensions under the NFL's personal conduct policy.

Hernandez has already received a $9.25 million of a $12.5 million signing bonus.

There is language in the Collective Bargaining Agreement that allows teams to nullify contracts and recoup bonus money in the case of incarceration or other off-field transgressions, but Hernandez never missed any football-related activities before he was released.

Had the Patriots' primary concern been about money, it would have made more sense to allow him to remain on the roster while the legal proceedings play out. Had Hernandez been under contract and unable to play because he was in jail or suspended by the league, the Patriots may have been able to save up to $37 million.

"Whatever chance of recouping previously paid bonus may have died when they released him," said Andrew Brandt, a former agent and personnel executive for the Green Bay Packers, who now works as a business analyst for the NFL.

But now the Patriots will likely have to accept a major salary cap hit. On March 17, $1.137 million of Hernandez's $1.2 million salary became guaranteed. He will count a little over $5 million against the 2013 salary cap, which includes a guaranteed base salary of $1.323 million.

A $7.5 million hit against the salary cap comes in 2014 as the three remaining $2.5 million prorated cap charges from his signing bonus are consolidated instead of being spread over the 2014-16 seasons.

The Patriots could try to withhold money owed to Hernandez — like weekly payments owed during the season, or the $3.25 million due next March as part of his deferred signing bonus — and force Hernandez, his agents, lawyers and potentially the NFL Players Association to file a grievance to collect it.

The NFLPA, through director of communications Carl Francis, declined to comment on Hernandez's arrest and release.

The NFL wanted to refrain from making any statements until after formal chargers were announced, but once the Patriots released Hernandez, the league made its first comments since the homicide investigation began.

"The involvement of an NFL player in a case of this nature is deeply troubling," the NFL said in a statement released by spokesman Greg Aiello. "The Patriots have released Aaron Hernandez, who will have his day in court. At the same time, we should not forget the young man who was the victim in this case and take this opportunity to extend our deepest sympathy to Odin Lloyd's family and friends."

Hernandez received his contract extension at age 22, after only two seasons in the NFL. As a player with three years experience, he will be subject to the NFL waiver system that allows other teams to place a claim on him before 4 p.m. ET Thursday.

But with Hernandez embroiled in a homicide investigation, it would be quite the risk — and public relations nightmare — for any team to do so. If a team were to claim Hernandez, they would also pick up the rest of his contract.

The Patriots, under owner Robert Kraft, have a history of cutting ties with players in legal trouble. In 1996, the team released rookie defensive tackle Christian Peter before the start of training camp because of his history of arrests while at the University of Nebraska, including a charge of sexual assault. Kraft's wife, Myra, pushed her husband to release a player with such a rap sheet.

Myra Kraft died in 2011 after a battle with cancer, but her legacy remains in Foxborough through the Myra Kraft Giving Back Fund.

When Hernandez signed his new contract last year, he gave a $50,000 donation to the charitable organization, citing the impact the Kraft family had on his life.

"He changed my life. Now I'm able to basically have a good chance to be set for life, and have a good life," Hernandez told reporters last July. "He didn't need to give me the amount that he gave me, and knowing that he thinks I deserve that, he trusts me to make the right decisions, it means a lot. It means he trusts my character, and the person I am, which means a lot, cause my mother, that's how she wanted to raise me. They have to trust you to give you that money. I just feel a lot of respect and I owe it back to him."

WATCH: Hernandez led from home in handcuffs

New England Patriots tight end Aaron Hernandez was taken from his home in handcuffs Wednesday, more than a week after a Boston semi-pro football player was found dead in an industrial park a mile from the player's house. (June 26)
AP